Saturday, July 31, 2010

A tunnel too far

Almost the first thing you learn when studying economics is the basic law of supply and demand. Simply put, lower prices increase demand, higher prices reduce it where substitutes are available.

For some reason, the management of the Western Harbour Tinnel seems never to have grasped this elementary rule. Their response to years of losses has always been, not to lower tolls in the hope of attracting more business, but to raise them even further, thereby driving yet more potential users to divert to the congested but much more affordable Cross-Harbour Tunnel between Hung Hom and Causeway Bay instead.

From tomorrow Western Harbour Tunnel fees, already the highest among the three tunnels beneath the harbour, will go up yet again. This could be an indication of chronic stupidity, but I suspect there is another agenda behind it. The company may figure that the government, exasperated by the impact of CHT congestion on traffic management, will eventually solve its problems by taking the Western Tunnel off its hands, implying that the company would receive substantial compensation and rid itself of a loss-making asset. Watch this space.


ulaca said...

I reckon you could well be right. It's a very Hong Kong sort of tunnel, to be sure.

Foamier said...

I think with all the extra lanes it is a sort of business class tunnel, hence worth paying a bit extra for. And since it is virtually unused, it is faster (once you have found it); getting back to the Island quicker from the Dark Side is certainly worth the extra bucks. However, on the same basis the other tunnels represent extra value in the other direction, by delaying one's arrival on the DS.